Gastrointestinal endocrine cells and neurons share the expression of several unique markers. Thus a common, fundamental regulatory pathway is likely to operate within the developing neuro-ectoderm and endoderm to control neuronal and endocrine cell differentiation, respectively. The Notch-system is central in regulating neuronal differentiation and our data implicates a similar fundamental role in endocrinogenesis of the pancreas. Messenger RNA profiling studies during pancreatic ontogeny of several members of the Notch-system including Notch-1, -2, and -3, the ligands Jagged-1 and -2, as well as the downstream effector HES-1, reveal elevated expression levels during the protodifferentiated stage. Within this period, massive growth of the epithelium of the pancreatic buds occurs by branching morphogenesis with limited formation of endocrine cells. During the secondary transition from day E15.5 - E17.5 in the rat (one day earlier in the mouse) a burst occurs in both endocrine and exocrine cell differentiation. The expansion of the endocrine population during this period requires the function of NeuroD, a basic-Helix-Loop-Helix protein (bHLH) also expressed in the central nervous system, the activity of which might be triggered by the observed decrease in Notch expression. Since HES-1 was the single downstream effector detected in pancreas this prompted analysis of mice lacking this gene. Preliminary data show that HES-1 null-mutant mice have a severe pancreatic phenotype with retarded formation and growth of the two buds. This hypoplasia appears to be caused by marked accelerated differentiation of mitotically quiescent endocrine cells in pancreas- as well as in the stomach and duodenum. This phenotype correlates with the accelerated neuronal differentiation as reported in the CNS in mice that lack HES-1. Our data strongly support the hypothesis that Notch signaling is responsible for the timed expansion of pancreatic precursor cells, and that the endocrine cell may be formed by the action of a bHLH-factor driven cascade converging on a Jagged-like factor. In analogy with neurogenesis this could be envisioned as a process of lateral inhibition where cells in the pancreatic epithelium expressing Jagged-like factor(s) undergo endocrinogenesis and subsequently migrate to form endocrine clusters of islets. In further support of the model we have demonstrated high levels of Jagged-1 like immunoreactivity in mature and newborn islet beta cells and have shown that forced HES-1 expression actively suppress the beta cell phenotype by inactivation of insulin gene expression through neutralization of NeuroD function. The overall aim of this study is to further characterize the Notch-system in early pancreatic development. We focus on studies to manipulate and control further expansion of the precursor pool of cells which is followed by attempts to derive mature beta cells. This will be of utmost importance in future attempts to create substantial amounts of mature beta cell mass for transplantation.